WorksheetsFinancial Accounting Chapter 4 & 5 Review
Total questions: 24
Worksheet time: 12mins
Imagine a catering business named 'Delicious Bites' uses the gross method for recording its sales. What does this imply about how they handle discounts?
Discount is recorded at the time of sale
You cannot record using the gross method
No discount will be recorded at the time of sale
All of the above
InfoTech, a local tech company, receives an order for $400,000 of computers. When should revenue be recorded?
When the invoice is mailed
When customer places order
When payment is received
When the computers are delivered
Imagine you're running a bookstore. How would you account for discounts in your financial records?
Discounts are recorded if they are paid on time by customers.
Discounts are recorded at the time of payment if it is expected that the customer will pay on time.
Discounts are recorded at the time of sale, regardless of when the customer pays.
Discounts are not recorded in the financial records.
XYZ Corporation sells a batch of electronics on credit for $1,000 with terms 2/10, n/30. What does '2/10, n/30' mean?
2% discount if paid within 10 days, otherwise net amount due in 30 days.
10% discount if paid within 2 days, otherwise net amount due in 30 days.
2% discount if paid within 30 days, otherwise net amount due in 10 days.
No discount is offered; full amount due in 30 days.
Imagine you're running a bookstore. In your accounting books, what kind of account is Allowance for Doubtful Accounts?
Contra-account
Asset
Liability
Expense
Imagine a bookstore named 'PageTurners' had net sales amounting to $340,082 for the year, and their accounts receivable stood at $10,234 for the same period. What would be the Accounts Receivable turnover rate for 'PageTurners'?
33.23
3.00
0.03
3,480,399,188.00
The owner of a company approaches his accounting team and threatens to fire them if they do not make the company's financial records look excellent for the company's next quarterly meeting. What kind of fraud is this?
Pressure
Rationalization
Opportunity
At a local restaurant, servers are required to tally their sales at the end of their shifts. Managers then verify these sales totals at the close of the business day, and finally, the restaurant's accountant records these totals in the financial records. This process is an example of what control activity?
Adequate documents and records
Segregation of duties
Checks on recorded amounts
Safeguards over assets and records
A retail company mandates that all sales transaction records must be preserved for a duration of 36 months. What control activity does this policy exemplify?
Adequate documents and records
Segregation of duties
Checks on recorded amounts
Safeguards over assets and records
At Sunshine Bakery, the policy mandates that bank reconciliation journals are to be checked by two other accountants before being submitted and closed. What kind of control activity does this represent?
Checks on recorded amounts
Safeguards over assets and records
Adequate documents and records
Segregation of duties
Imagine you are the accountant for XYZ Corp. At the end of the month, you notice discrepancies between the balance shown in the company's ledger and the balance reported by the bank. What is the primary purpose of preparing a bank reconciliation statement in this scenario?
To reconcile the differences between the bank's and XYZ Corp.'s records.
To calculate XYZ Corp.'s tax liabilities.
To record XYZ Corp.'s sales transactions.
To update XYZ Corp.'s budget.
A restaurant has a policy that whenever the cash register holds more than $500, the excess cash must be transferred to a safe in the manager's office. What control activity does this represent?
Checks on recorded amounts
Safeguards over assets and records
Segregation of duties
Adequate documents and records
Imagine a small business, Bella's Boutique, deposits a check from a customer into their bank account after the bank has already closed for the day. This is known as a deposit in transit. Considering this situation, which account on the bank reconciliation statement would be affected and in what way?
Bank - increase
Bank - decrease
Company - increase
Company - decrease
Imagine you're running a small cafe, and a regular customer's payment via check is declined by the bank due to insufficient funds. In your accounting records, which account would you CREDIT to reflect this situation?
Accounts Receivable
Cash
Accounts Payable
Service Revenue
Imagine XYZ Corporation is undergoing an audit. Under the Sarbanes-Oxley Act, who is ultimately accountable for the accuracy of XYZ Corporation's financial statements?
Chief Financial Officer
Company Management
External Auditors
Board of Directors
A company employee decides to steal money out of the cash drawer. The company lacks any modes of internal control regarding its cash management. What type of fraud is this?
Opportunity
Rationalization
Pressure
A company manager decides to forge financial documents. He does not feel guilty because "many managers have done it before". What type of fraud is this?
Rationalization
Pressure
Opportunity
A small bakery sets up a Petty Cash fund of $1200 for daily expenses. By the end of the month, they have receipts totaling $300 for flour and ingredients, $250 for kitchen supplies, and $105 for miscellaneous expenses like cleaning supplies. How much petty cash does the bakery have left?
$900
$400
$700
$545
When is it acceptable for a company to commit fraud?
Never
If it benefits the shareholders
When the CEO says so
Only on Fridays
When does collusion occur in the context of businesses?
Collusion occurs when businesses are transparent and honest in their interactions.
Collusion occurs when three or more businesses openly agree to work together.
Collusion occurs when one business acts alone without involving others.
Collusion occurs when two or more businesses secretly agree to deceive or defraud others.
Imagine you received an invoice from a supplier stating 3/15 net 30. What does the 15 represent in this context?
Number of days for payment in order to receive discount
Number of months for payment
Number of items in the order
Number of hours for delivery
Two employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:
Protection from theft and fraud
An affordable price
A manual system as backup
Printed financial statements
Imagine a company is considering implementing a new internal control system. What is the primary purpose of internal controls in a business environment?
To increase sales
To ensure accurate financial reporting
To reduce employee workload
To enhance customer satisfaction
Imagine a company named 'TechGears' is considering offering a discount to customers who pay their invoices early. What is the primary benefit of offering such a discount?
To increase the company's inventory levels
To reduce the company's tax liabilities
To enhance customer satisfaction
To encourage faster payment and improve cash flow
